White House estimates FDIC to pay out $12 billion through 2010

White House budget estimates (pg. 17) show the Federal Deposit Insurance Corp could pay almost $12 billion to cover insured bank deposits through fiscal 2010 if more banks fail.

Deposit insurance.—Over the next five years, net outlays for the Federal Deposit Insurance Corporation are expected to increase by $5 billion. Net outlays increase by $4 billion in 2008 and $12 billion in 2009 due to higher projections of net payments for deposit insurance losses over the next few years. Starting in 2011, net outlays are lower than in the February estimate because of higher projected premiums necessary to restore funding ratios in the Deposit Insurance Fund.

Opinion: This seems very low with the current condition of the banks and not even seen feeling the effects of CRE and Option ARMs yet. IndyMac alone is going to eat up between $4 billion and $8 billion of the FDIC insurance fund this year.